Alpaca, Livestock and Farm Depreciation

AN ADDITIONAL 50% FIRST YEAR DEPRECIATION

There are more important changes for alpaca breeders in the recently enacted into tax law. In an effort to stimulate the economy, Congress is giving taxpayers a bonus 50% first-year depreciation write-off for most new capital assets, including single purpose agricultural buildings placed in service for the alpaca farm. (Please note that certain agricultural buildings also qualify for the Section 179 deduction.)

Single purpose agricultural (alpaca livestock) or horticultural structures. A single purpose agricultural (livestock) or horticultural structure is qualifying the property for purposes of the section 179 deduction. For purposes of determining whether a structure is a single purpose agricultural structure, poultry is considered livestock.

Agricultural Structure. A single purpose agricultural (livestock) structure is any building or enclosure designed, constructed, and used for both the following purposes:

1. To house, raise, and feed a particular type of livestock, such as alpacas, and its produce.

2. To house the equipment, including any replacements, needed to house, raise or feed livestock."

Section 179 Deduction
IRS Publication 225, "Farmer's Tax Guide", Chapter 8 - Depreciation, Depletion, and Amortization

In effect, this additional write-off means that you can recover more of the cost of a alpaca business asset, such as an alpaca or a barn, in the year you place it in service.